BUSINESS PLAN

[Pages:30]ShockED LLC

SHOCKED

BUSINESS PLAN

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Akash Rudra Chattahoochee High School

GA FBLA 2017-2018

shocked.water

If you have any questions or concerns, or simply want more information, please send an email to ShockED@ or call (678) 534 6978.

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ShockED LLC

1.0 Executive Summary

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2.0 Company Profile

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2.1 LEGAL ENTITY/COMPANY OWNERSHIP

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2.2 COMPANY VISION

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2.3 MISSION STATEMENT

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2.4 COMPANY GOVERNANCE AND OWNERSHIP

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2.5 LOCATION

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2.6 IMMEDIATE DEVELOPMENT GOALS

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2.7 START-UP SUMMARY

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3.0 Industry Analysis

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4.0 Target Market

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5.0 Competition

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5.1 RESERVE OSMOSIS

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5.2 COAGULATION TREATMENT/CHEMICAL TREATMENT

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5.3 MULTI-STAGE FLASH DISTILLATION

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5.4 FUTURE COMPETITORS

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6.0 Sales Strategy

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6.1 PRICING

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6.2 STRATEGY AND IMPLEMENTATION

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7.0 Marketing Plan

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8.0 Operations

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8.1 PRODUCTS

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8.2 SUPPLIERS

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8.3 MANUFACTURING

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8.4 WORKFORCE AND PRODUCTION PLAN

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8.5 FACILITY

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9.0 Management and Organization

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9.1 DAY-TO-DAY OPERATIONS

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10.0 Long-Term Development

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10.1 STRENGTHS

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10.2 WEAKNESSES

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10.3 OPPORTUNITIES

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10.4 THREATS

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10.5 CHARITY

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10.6 1ST YEAR GOALS

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10.7 5TH YEAR GOALS

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10.8 10TH YEAR GOALS

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11.0 Financials

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11.1 FINANCIAL ASSUMPTIONS

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11.2 ACCOUNTING METHOD

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11.3 MONTHLY CASH FLOW

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11.3 MONTHLY INCOME STATEMENT

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12.0 Supporting Documents

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12.1 WORK CITED

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ShockED LLC

1.0 Executive Summary

According to , about 1.2 billion people worldwide are affected by a physical scarcity of water. This scarcity of clean water leads to dehydration, which can lead to deadly. While numerous attempts have been made to try and solve the shortage, they have all suffered from two major faults: being to expensive and/or inefficient. ShockED's central goal is to address these flaws by integrating the latest scientific discoveries with our own research to form a product that could help reduce the dire water shortage.

ShockED's product strives to provide both an affordable and efficient method to produce water. The product utilizes a process developed by MIT known as shock electrodialysis that can both desalinate and purify water. It also incorporates carbon nanotubes as the primary filter to further boost the efficiency of the product. The ability to complete both desalination and purification in one unit offers a major improvement over the current labyrinth of buildings needed to complete both processes, providing ShockED's product with a distinct advantage over current technologies.

Furthermore, the water purification industry is in a period of stagnation, with a few technologies competing for the market and innovation at a relative standstill, allowing for ShockED's innovative product to gain a sizable marketshare. Many major water utilities, namely American Water and Veolia Water, have expressed interest in exploring new purification techniques as well as the desire to implement desalination, underscoring the need for ShockED's product. As ShockED is a business to business company, selling to these companies will provide ShockED with many clients, helping secure the company's financial success.

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ShockED LLC

2.0 Company Profile

2.1 Legal Entity/Company Ownership

ShockED is set up as a Limited Liability Company (LLC) for legal purposes and as an SCorporation solely for taxation purposes as of November 27, 2017. The LLC format allows ShockED to perform without many corporate restrictions. ShockED chose to become an S-Corp for taxation purposes in order to save the owners money on selfemployment tax.

2.2 Company Vision

ShockED works to secure the future by providing an alternative source to purify water. This is done by providing a supplemental technology to water treatment plants, letting them purify water much more efficiently than the technology that is currently available. ShockED then plans to pivot from profits made by selling systems to water treatment plants to charitably install water treatment facilities in poorer countries that utilize the desalination aspect of ShockED's product.

2.3 Mission Statement

ShockED aspires to provide clean and drinkable water to the water utilities of the world, hence providing much more affordable water for people all around the world.

2.4 Company Governance and Ownership

After bringing on investors, ShockED will have 2 founders that will have approximately 37.5% each. The remaining 25% will be allocated to those investors who wish to buy into the company at an approximate $2.8 M evaluation. The equity position of the CEOs will go down over time as the company brings on more shareholders. The board of directors will consist of the two CEO's as well as any future major stockholders who are elected by the shareholders. Directors not employed directly by the company reserve the right to appoint other board members, whom are then confirmed by a vote of the shareholders.

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2.5 Location

ShockED will have its factories located in Anaheim, California so that raw materials can be easily transported from Mexico. In the second year, we plan to expand our factories to the East Coast in Roanoke, Virginia for ease of transportation to nearby states. Mexico is the ideal area to get natural resources because it is rich in minerals such as graphite, copper, and steel, and due the NAFTA agreement, there will be no taxes for transnational exports. The company will lease the one 25,000 square foot facility the first year for prototyping, with a cost of $84K for the facility. After the first year, we will expand to two bigger, 40,000 square foot facilities before buying the warehouses on the third and fourth year respectively.

2.6 Immediate Development Goals

ShockED will invest money in a laboratory as well as a research and development team that will work to make our product as cost efficient as possible. ShockED already has a patent filed that will prevent any competition from utilizing the same process to purify water. In the first year of research development, the main focus is finding a method of production for the ShockED unit that is optimized to keep the production cost low. Because ShockED integrates so many new technologies, this year is absolutely pivotal for a successful execution of our business. Therefore, in the first year, two experts will be hired to oversee the production of our first product. One engineer and one material scientist will fine tune the production plans to make costs as minimal as possible. The first year will mainly be trail and error to find the best method to integrate our technology into a plant. ShockED is a proven technology, but research and development is needed to implement the technology into a large scale plant at the lowest cost. It is ShockED's goal to finish research and development by the end of the first year and build a prototype. Once orders are secured in the second year, the model of production built from research and development will be used to build the rest of the products.

2.7 Start-Up Summary

During the initial start of ShockED, we predict a loss of $833K due to the high-price expenditures such as facility rent, manufacturing, machinery, and materials. The

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manufacturing for the first year will be expensive, however, the main focus of the first year is building the product and conducting field testings so that the technology complies with government regulations. If the company does not spend time to do these tests, the product could stop working after it was installed. This could affect many people, and tarnish the reputation of the company. There are many other costs that are increasing throughout the years such as salaries, utilities, and transportation.

To acquire the approximate $833K needed to up-start ShockED, each founder will invest $30K of their own money. The company will obtain the remaining $773K from investors. We forecast that the ROI for investors will be at -98% at the end of year 2 and 16% at the end of year 3 (based on an approximate $2.8M evaluation).

3.0 Industry Analysis

The worldwide water purification equipment industry is currently estimated to be valued at $38.3B dollars. In fact, a study published by the Feedonia group forecasts that this number will rise to $53.8B dollars by 2018 due to both the increased demand for water and ever-growing scarcity of fresh water ("Water Treatment Equipment..."). This trend of increase has been seen for the past 10 years and will most likely continue in conjunction with the growth of the human population. Major customer groups within this industry include water treatment plants, water packaging companies, and individual governments. At initial stages, ShockED will be targeting large scaled water treatment plants within the United States. These purification plants all have one major need: efficiency.

Through current methods, the treatment process is very inefficient and a large amount of usable water is being wasted. In order to increase profits throughout the industry while maintaining the water output, a more efficient method is required, which ShockED offers. ShockED projects to obtain 5 percent of the US water purification equipment industry by the end of year five. ShockED believes this number to be reasonable because its product offers a significant improvement over current methods. Also, it serves as a complement to pre-existing treatment companies in that they can simply retrofit their equipment with our

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product. Therefore, due to ease of use as well as utilization of groundbreaking technology, 5 percent of the $11.6B dollar market ("Water Treatment Equipment...") seems reasonable. In order to market our product to convince water treatment plants and packaging companies to go from their original water treatment technologies to ShockED's method, efficiency will be the main selling point. By explaining how our product is more efficient than the current chemical treatment plants and reverse osmosis, consumers will see how the original cost of buying and installing the ShockED system will eventually be overridden by the decrease in cost of maintaining the plant and higher yield of fresh water. In order to make sure that consumer demands can align with our initial production abilities, ShockED will target smaller water treatment plants in its first year after research and development. The strategy in marketing here, is that since ShockED sells to other businesses, the boost in profits of one company by using ShockED will force our competitor to buy the product.

4.0 Target Market

ShockED plans to target the US water purification equipment market, which as of 2017, was valued at $13B dollars. America's water infrastructure is controlled by a variety of companies known as water utilities. Ranging from reverse osmosis plants to chemical treatment facilities, each company generates revenue by purifying then distributing water from bodies of water to people's homes. These companies generate the most revenue when they are able to distribute water both at a cheap price and high quality that meets EPA standards. However, the impending US water crisis, already seen hampering California, has led to many companies seeing their profits dwindle with some companies even losing money. This is largely attributed to the large amounts of water that is wasted during the purification process. Due to this, many companies are exploring new technologies that can more efficiently purify water and even desalination plants to offer an alternative source of water production. In its current state, the US market is ripe for significant growth as fresh water becomes even more scarce.

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